Conclusion of Dual Class Stock Structures

          This study discussed the key aspects of dual class share structures in terms of trends, benefits and problems associated with it, and compare it with the single class share structure. Dual class structure has been defined as a way of offering shares to the public whereby the public are not given voting rights but profits accrued from their investments are shared equally. On the other hand, single class share structure allows the public shareholders voting rights. The main reason why companies offer their shares to the public is to raise capital for growth and expansion. However, the direction that the company takes is often influenced by the mission and vision crafted by the founders of the company. Many company founders and executives believe that giving the public shareholders voting rights might put unnecessary long-term pressure on the company, especially when their demands go against the foundational goals, values, and mission and vision statements. To avoid these short-term jitters, companies have been adopting dual class structure instead of the traditional single class share in order to give the founders or CEOs and their families more voting rights and keep the public shareholders from interfering with the corporate management affairs. The dual class structure has caused controversies as many investors opposed to it while corporate founders and CEOs find the concept appropriate for long-term sustainability and growth.  I used pivot table to analyze excel data more effectively to look at the performance  for dual class share percentage vs single class share through Two samples t-test was conducted to compare the means of single class and dual class structures in terms of ROA, ROE, Profit Margin and Tobin’s Q. In terms of ROA volatility, although dual class shares tend to be higher than single class shares, dual class shares are more volatile. ROE comparison of the two share structures showed that dual class shares are more profitable than single class shares, but they depict unsteady trend. The Tobin’s Q comparisons shows that dual class firms has suffered downgrading more times compared to single class firms. Finally, the comparisons show that the profit margin for single class shares is higher than profit margin for dual class shares. Two key conclusions are therefore drawn from the Two Samples T-test results conducted on the data collected over 12 years (1990-2002) comparing dual class shares and single class shares. First, while dual class shares show higher profitability, it has high fluctuation trends, which the investors can deem risky for their shares. Second, firms should rethink their dual class strategy because of its potential risks to which it can subject the company and its shareholders. Finally, I did matching for some specific reasons because I found that  they are not very comparable so, I have to make sure about the same industry and the same Size ,SIC2, Years, and Leverage. this what I find did comparing firm performance between dual class share vs single class shares and I put  my results after matching dual class firms with single class firms witch is operate in the same industry for ( SIC2 , year, assets , and leverage). So, even though  find different results we trust more in matching sample results).